USD/CAD consolidates in a range above 1.3400 mark, Canadian GDP in focus

• USD/CAD was seen consolidating the previous day’s strong intraday gains of over 100 pips.
• The USD remained depressed amid growth concerns, fiscal impasse, declining US bond yields.
• A modest uptick in oil prices undermined the loonie ahead of the monthly Canadian GDP print.

The USD/CAD pair struggled for a firm direction on Friday and remained confined in a range, above the 1.3400 mark through the early European session.

A combination of factors failed to assist the pair to capitalize on the previous day’s strong intraday bounce of over 100 pips from seven-week lows, instead led to a subdued/range-bound price action on Friday. Oil prices recovered further from the overnight slump to three-week lows and underpinned the commodity-linked currency – the loonie.

This comes amid the heavily offered tone surrounding the US dollar, which further collaborated towards capping any meaningful upside for the USD/CAD pair. The greenback tumbled to fresh two-year lows amid doubts over the US economic recovery from the coronavirus pandemic and the impasse over the next round of US fiscal stimulus measures.

Investors remain concerned that the economic recovery in the US could be grinding to a halt in the wake of the ever-increasing numbers of COVID-19 cases. The worries resurfaced following Thursday’s release of the advance US GDP report. The preliminary estimate showed that the world’s largest economy collapsed by 32.9% during the second quarter of 2020.

Meanwhile, Congressional Republicans and Democrats have been struggling to reach a consensus on fiscal spending ahead of the expiry of the existing enhanced unemployment provisions on Friday. The US President Donald Trump added to the USD’s woes after he floated the idea of delaying the US presidential elections, scheduled for November 3. This coupled with the ongoing downfall in the US Treasury bond yields further undermined the greenback.

The downside, however, remained cushioned and the pair, so far, has managed to hold above the 1.3400 mark as investors seemed reluctant to place aggressive bearish bets ahead of the monthly Canadian GDP report. This, along with the US economic data will now be looked upon for some meaningful trading impetus later during the early North American session.

Technical levels to watch